License of Phil. Branch, how secured?

A BRANCH is a local operation in the Philippines of the foreign parent company abroad. It is a mere extension of the parent’s legal entity abroad and as such, liabilities in the Philippines incurred by the branch accrues to the parent so that in case of financial insufficiency, the parent abroad may be required to make good of the deficiency. Its capitalization shall depend on the nature of operations in the Philippines, whether on a local market requiring at least US$200,000 or on export of at least 60% of its produce, in which case, the US$200,000 may not apply and may capitalize based on an amount it may sustain operations, but may not be less than PhP5,000. Tax implications are almost similar to that of a domestic corporation in the Philippines, and taxes applies only to the operations of the branch in the country.

Before it can do any legitimate operations in the Philippines, it needs to secure a license to do business in the Philippines with the Securities and Exchange Commission (SEC). Upon such license, it will be authorized to conduct business similar to a corporation and with such powers and attributes provided by law. It is likewise required to secure a Mayor’s permit with the local government (LGU) of location and register with other government bodies like, Bureau of Internal Revenue (BIR), Social Security System (SSS), Home Development Mutual Fund (HDMF 0r Pag-ibig), and Philippine Health insurance Corporation (PHIC).

If you intend to register one, hereunder are the basic steps and requirements with the SEC:

a. After deciding establishing one, you may contact a Filipino residing in the country to act as a Resident Agent who shall be authorized to receive summons and communications relative to any legal process with the SEC and other government agencies in the Philippines in behalf of the corporation;

b. Make available the following documents:

• Consularized copy of the board resolution authorizing the establishment of the branch in the Philippines, appointing a resident agent, and authorizing the opening of a treasurer’s in trust account for the capitalization;
• Copy of the audited financial statements of the preceding year certified by an independent certified public accountant in the home country; and,
• Consularized copy of the Articles of Incorporation/Registration of the parent company abroad certified by the issuing agency abroad and with English translation if in non-English language.

c. Check availability of name with the SEC system. Name is usually the name abroad with the added phrase “Philippine Branch” and shall be reserved with the SEC reservation system upon payment of PhP30.00 per month;

b. Fill out an Application form, SEC Form No. F-103. Resident agent may fill out and sign this document, otherwise, a Resident Agent will have to execute a confirmation of its appointment as Resident Agent;

c. Open a treasurer’s in trust account (TITF) with the depository bank of choice. The resident agent or any other person duly authorized in the Board resolution above may be appointed as treasurer. TITF account can only be deposited but could not be withhdrawn except upon approval of the branch application.

d. Inwardly remit the required capitalization to the TITF account and secure with the bank, Certificate of Inward Remittance and the Certificate of Bank Deposit.

e. Collage all the above requirements and reproduce at least six (6) sets for the SEC.

f. Present the papers to the SEC for pre-evaluation. Upon finding the documents in order, then the SEC will issue a Payment Assessment Form (PAF) for the filing fee. Payment of the fee and receiving the sets marks the formal filing of the application.

g. Within a period of five (5) to ten (10) days, the approval of the application will be released and the Philippine Branch is now registered with the Philippines thereby allowing the branch to do business in the Philippines. If the operations would require a secondary license, then such license shall be required before the actual operations.

After securing the License to do Business in the Philippines, TITF account may now be regularized or withdrawn and be maintained another bank of choice. Registration with the BIR, LGU, and SSS may proceed. Other applications may be dealt with upon actual employment of at least one (1) employee. By virtue of the registrations, reportorial requirements will be required and they will be advised during the registration process.

“Taxes affect lives, care for taxes and save lives”

Related Articles:

a. How to register a corporation?;
b. What are the registrable entities in Philippines?

Tags: License to do business, Philippine branch, post-sec registration, Resident agent, TITF